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In theory, a smart forward-thinking country could come along and look at themselves as a company/reserve and make a virtual currency + exchange that is desired

In theory, a smart forward-thinking country could come along and look at themselves as a company/reserve and make a virtual currency + exchange that is desired because they will not touch it. They could create a killer currency, a neutral country that doesn't play in the theatre of games. Like the Swiss used to do with banking. However banking is also getting more regulated. Money flow is living under a rule where "papers please" is the norm, untracked cash is suspect. Many of the excuses for this much regulation on a currency is the War on Drugs and the War on Terror. The demand just keeps getting higher and higher for a killer currency.

roymurdock 11y ago
The "killer currency" must reach a point where it is robust enough to withstand what Kroll, Davey, and Felten describe as a "Goldfinger" attack. [1] They use basic game theory to show that any actor participating within the Bitcoin community would not commit a 51% attack. They go on to identify the biggest threat to a budding virtual currency: some outside actor being able to take a sufficiently large short position on Bitcoin (or otherwise gain utility from Bitcoin's destruction), then mounting or simply threatening to mount a 51% attack. This would start a death spiral that would cause rational actors not to participate in the network at an increasing rate. They conclude that good, active governance is necessary to make sure that Bitcoin and similar virtual currencies survive. The creators will need to "touch" the currency in order to protect and maintain its value. A true killer currency would be a virtual currency that is pegged to some well-chosen and largely diversified basket of essential goods such as wheat, lumber, metals, energy, etc. Peg the currency to a broad range of economic inputs and raw materials. [1] Full paper here: https://www.cs.princeton.edu/~kroll/papers/weis13_bitcoin.pdf https://www.cs.princeton.edu/~kroll/papers/weis13_bitcoin.pd...
- Natanael_L 11y ago
  Any peg requires a trusted third party. It would be like tying gold certificate ownership to cryptocurrency tokens, like colored coins. And when you have that trusted third party, why do you have independent miners? In other words, you get Ripple again rather than Bitcoin or an altcoin. You drop the decentralization.
pjc50 11y ago
There's no way to do this on a large scale without attracting hostility. Even Switzerland were eventually strong-armed into ending banking secrecy.

roymurdock 11y ago

The "killer currency" must reach a point where it is robust enough to withstand what Kroll, Davey, and Felten describe as a "Goldfinger" attack. [1] They use basic game theory to show that any actor participating within the Bitcoin community would not commit a 51% attack. They go on to identify the biggest threat to a budding virtual currency: some outside actor being able to take a sufficiently large short position on Bitcoin (or otherwise gain utility from Bitcoin's destruction), then mounting or simply threatening to mount a 51% attack. This would start a death spiral that would cause rational actors not to participate in the network at an increasing rate. They conclude that good, active governance is necessary to make sure that Bitcoin and similar virtual currencies survive. The creators will need to "touch" the currency in order to protect and maintain its value. A true killer currency would be a virtual currency that is pegged to some well-chosen and largely diversified basket of essential goods such as wheat, lumber, metals, energy, etc. Peg the currency to a broad range of economic inputs and raw materials. [1] Full paper here: https://www.cs.princeton.edu/~kroll/papers/weis13_bitcoin.pdf https://www.cs.princeton.edu/~kroll/papers/weis13_bitcoin.pd...

Natanael_L 11y ago
Any peg requires a trusted third party. It would be like tying gold certificate ownership to cryptocurrency tokens, like colored coins. And when you have that trusted third party, why do you have independent miners? In other words, you get Ripple again rather than Bitcoin or an altcoin. You drop the decentralization.

pjc50 11y ago

There's no way to do this on a large scale without attracting hostility. Even Switzerland were eventually strong-armed into ending banking secrecy.